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Preventing Surprise Billing: What You Should Know About the New Rule

On July 1, the Biden-Harris Administration issued an interim final rule titled “Requirements Related to Surprise Billing; Part I” in an effort to address unanticipated out-of-network health coverage charges. While the rule is not yet law, it will take effect on January 1, 2022, following a comment period.

Also known as an unexpected balance bill, a surprise bill is an invoice for medical care from an out-of-network provider or facility. The insured is often left with higher costs than if an in-network provider had been used, and in most cases will be billed for the difference between that out-of-network charge and the amount covered by their insurance. This often happens in emergency situations when an insured may not realize that the provider is out-of-network, hence the “surprise bill” terminology. Even an in-network hospital might use out-of-network providers, and the patient may have little or no choice as to who provides the care.

The new rule attempts to address this situation in several ways, first requiring emergency services to be covered without prior authorization and regardless of whether the provider or facility is in- or out-of-network (assuming that the insured’s coverage provides for emergency services).

It also limits cost sharing (deductibles, coinsurance, copayments) for out-of-network services to in-network levels, and requires out-of-network cost sharing to count towards any deductibles or maximums.

While the rule focuses largely on emergency treatment including air ambulance services, it also applies to non-emergency care at certain in-network facilities including hospitals and ambulatory surgical centers. It further requires health care providers and facilities to furnish patients with a one-page notice covering the applicable requirements regarding balance billing, any applicable state balance billing limitations or prohibitions, and a method for contacting state and federal agencies if the patient believes the requirements of the notice have been violated. That information must be made publicly available as well.

The protections of the rule apply to anyone receiving health coverage through their employer, federal- or state-based Marketplaces, or through an individual insurer. They do not apply to those with coverage via Medicare, Medicaid, Indian Health Service, Veterans Affairs Health Care or TRICARE, all of which already prohibit balance billing.

While the compliance burdens of the new rule fall squarely on healthcare providers and insurers, employers should understand its provisions prior to its taking effect on January 1, 2022.

Questions about surprise billing or other benefits issues? Contact Consolidated Insurance.

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